AUD/USD is again challenging resistance at 0.6600 with the support of fresh economic data. However, experts think the Australian dollar is at risk of weakening.

The Aussie dollar's rebound attempt received double support from the latest Australian and Chinese economic data, as well as the greenback's depreciation. AUD/USD in Thursday's Asian session (March 7) crept back towards resistance at 0.6600. However, some experts think the Aussie is at risk of weakening in the weeks ahead.

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Australia's Gross Domestic Product (GDP) report yesterday showed an increase of 1.5% (y/y) in the fourth quarter of 2020. The performance was weaker than the 2.1% economic growth in the previous period but better than the consensus estimate pegged at 1.4%.

The data is consistent with the expected timing of the RBA rate cut starting September, a few months after several other major central banks implemented similar policies. The Federal Reserve and ECB are expected to cut their respective interest rates from June. This gap is positive for the Australian dollar.

The release of Australian Trade Balance data this morning missed expectations. However, China's Trade Balance was good. China's exports grew 7.1% annually, well above expectations of 1.9%. China's imports also surged 3.5%, three times stronger than the consensus estimate. This good news is positive for the Aussie's prospects as one of its major trading partners.

Apart from that, some experts think the AUD rebound is related to the ongoing USD depreciation and general strengthening of the commodity dollar. They think the outlook for the AUD will be bleak in the longer term, as the market is still underestimating some signals of weakness in the Australian economy contained in yesterday's GDP details.

"Real GDP edged up 0.2% q/q in Q4/2023 to 1.5% year-on-year. Real household consumption only grew 0.1% q/q in Q4/2023 and rose by the same amount over the year, much weaker than the RBA forecast," said Carol Kong, forex strategist at Commonwealth Bank of Australia.

"Our Australian economics team remains comfortable with the initial forecast of the (RBA) easing cycle starting in September. The market has also fully priced in a rate cut in September, but expects a much more gradual easing cycle than we anticipate. In our view, the reassessment of the RBA's rate cut (phasing) will be a burden to the AUD. We expect AUD/USD to weaken further to 0.64 in the coming weeks."